The Great Dilemma – Remortgaging to Pay Down Debt or Funding Major Purchases?
Buying a property is one of the biggest financial ventures you will ever come across, and many people once they have a mortgage forget that they are sitting on a goldmine of opportunity. If you have equity in your home, you can remortgage to release some of this money to pay for the things that you want or need.
Remortgages aren’t suited to all. Whether it is a suitable idea for you depends on how much you’re planning to borrow on top of your existing loan and what you’re planning to use the funds for. You need to remember that a further advance on your loan will mean higher monthly mortgage payments and probably an extended term.
Weddings: Always dreamed of a perfect wedding? Want to get hitched in a castle but don’t have enough in the bank? Why not remortgage and release some of your equity to be able to have the big white wedding that everyone dreams about?
Education Fees: The kids have grown up and suddenly they drop the bomb on you that they’ve decided to go to university, and you’re panicking because you don’t think you can afford it. Well by remortgaging your home, you can take a further advance in order to send your kids off to get their degree.
Another popular reason for a remortgage is to be able to have an exotic holiday of a lifetime. If you have little in the way of savings, borrowing additional funds by remortgaging may be a way for you to do it. But remember this may mean you’ll end up paying the mortgage off more slowly.
Repay Debts: Having lots of debts with various creditors can be stressful and hard to keep on top of, so why not remortgage your home and use additional borrowing as a way of repaying your debts and having your debts all in one place?
Again, make sure that you can afford to keep up with your repayments as you’re in danger of losing your home if you default on the loan. If you fail to repay the mortgage then your property could be repossessed and sold to pay the loan off.
A great investment is to remortgage your home and borrow additional money in order to do home improvements. You may want to extend the property to add another bedroom if you have a new addition, or smarten up the kitchen. All of these will add value to your property.
A remortgage doesn’t necessarily mean that you have to borrow more money however. You may just want to see if there is a better deal on offer that can reduce your monthly mortgage repayments.
Remortgaging isn’t just about borrowing more money though, as some people just want to save money by getting a better interest rate, or fix their interest to hedge against interest rate hikes. Whatever you decide, speak to a professional to make sure that you are making the right choices.
Timothy Frodsham writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.